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Email this6:26 am
August 27, 2026
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" For people in 50s and older investing largely determines the actual net worth. People who invest in the stock market consistently end up with capital gains and compounded investment returns accounting for the vast majority of accumulated wealth. "
I see lots of statements like this. It seems to ignore the fact that there can also be capital losses.
With the GICs on this site, you will always have more money at the end of the GIC term than you had at the start, assuming you hold the GIC to maturity. That is not necessarily the case with the stock market.
For people in their 50s and older, investing in the stock market can certainly increase net worth, but it can also result in significant losses. It seems misleading to talk about investment returns as though they are guaranteed or inevitable.
For someone who cannot afford to lose their capital, a GIC may be a much more appropriate option than the stock market. The stock market should not be presented as the only path to building wealth—or as a solution for people who are desperate to increase their net worth.
6:59 am
April 27, 2017
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Freedom said
" For people in 50s and older investing largely determines the actual net worth. People who invest in the stock market consistently end up with capital gains and compounded investment returns accounting for the vast majority of accumulated wealth. "I see lots of statements like this. It seems to ignore the fact that there can also be capital losses.
Over several decades diversified stock portfolios translate to capital gains overwhelming losses by a huge margin. This is true for anyone alive, assuming they persevered through comparatively short term periods of losses. The main risk from losses is that an individual might become averse to investing. For someone investing $2M+, putting all fixed-income assets into GICs is not practical or sensible.
8:14 am
October 27, 2013
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Mordko, I think the majority* of folk who frequent this forum are risk averse by temperament and see risk of loss of any capital, even on a nominal basis rather than a real basis, as a cause for alarm. You and I both know products like HISAs and GICs are savings products, not investment products, but that is the foundation of many 'portfolios' and it may well be some households have $2M in term deposits and stick handle through their entire lives doing just that. Most likely, the majority of the folk of the Silent Generation and the Greatest Generation did just that due to experiences of the Great Depression. My former spouse's parents were of that type and lived a modest comfortable retirement life but they didn't starve. For them, that was the right thing to do.
We both know that is not the way to build wealth but we also know some short term capital risk must be taken to capture the risk premiums that come with such investments. We also both know rolling periods of at least 10 years, if not as short as rolling periods of 5 years, almost certainly will provide positive results beating any fixed income product on a long term basis. There is overwhelming evidence from a variety of research that verifies that is the case. How one actually structures their portfolio to seek out risk premiums is also partly situational in terms of early retirement (SORR risk) and/or the latter/end stages of life. That is for each person to decide based on their temperament.
Posts like #27 are simply open ended assertions without appropriate context. They are not going to change what any forum member here already thinks.
* But not everyone. There are many posts by individuals that shed light on also having investment portfolios with bank advisors, brokerage firms both full service and self-directed. It is just that this particular forum is not the venue for such discussion.
8:21 am
August 27, 2026
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I see lots of statements like this. It seems to ignore the fact that there can also be capital losses.
“Over several decades, diversified stock portfolios translate into capital gains that overwhelm losses by a huge margin.”
That is an overgeneralization. Diversification can reduce risk, but it cannot eliminate the possibility of significant or permanent losses. The Great Depression is one example of how devastating a market collapse can be. Other prolonged downturns have also caused serious damage to investors’ wealth.
“This is true for anyone alive.”
That statement depends on an assumption that every investor will remain invested through every crisis. The fact that an event happens only once in a lifetime does not make it irrelevant. A once-in-a-lifetime event can still occur during an individual’s investing lifetime—and its timing can have a major impact on the outcome.
“Assuming they persevered through comparatively short-term periods of losses.”
This is another important assumption. It assumes that every investor will have the emotional strength, financial flexibility, and time horizon to remain invested during severe downturns. In reality, people may need to sell because of illness, job loss, retirement, family obligations, or changing financial goals. Investors are not machines, and human behavior is part of investment risk.
“For someone investing $2 million or more, putting all fixed-income assets into GICs is not practical or sensible.”
How can anyone make that judgment without knowing the person’s investment objectives, income needs, tax situation, time horizon, and tolerance for risk? For some investors, preserving capital and generating guaranteed income may be more important than pursuing higher potential returns.
This argument sounds more like a sales pitch than a universal truth. I have lived through several economic cycles and heard similar claims from many salespeople over the years. The problem is that these statements are often presented as if they apply to everyone, while ignoring market history, personal circumstances, and human behavior.
Investing in stocks may be appropriate for many people, but it is not a guarantee of wealth. Past market performance does not eliminate the possibility of future losses, and a strategy that works for one investor may be completely unsuitable for another.
Over several decades diversified stock portfolios translate to capital gains overwhelming losses by a huge margin. This is true for anyone alive, assuming they persevered through comparatively short term periods of losses. The main risk from losses is that an individual might become averse to investing. For someone investing $2M+, putting all fixed-income assets into GICs is not practical or sensible.
9:05 am
February 7, 2019
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I tend to be adverse to low returns. So, we still have a material position in Equities.
Spouse has a pension.
I have a LIF in-lieu of a pension from the same employer as the spouse's pension to spread the possible risks of something like Nortel of some years back . We have RIF's, non-registered investments and fully funded TFSA's. These are all in funds that overall work out to about 60% Equities, 40% Fixed Income. Fixed Income funds have yielded us 7.5% annualized returns over the last 10 years, the Equities 13%. All of this adds up to about 85% of our portfolio.
The remaining 15% is in Cash and GIC's definitely earning less than 7.5%. 20% of this is in a pool of Cash and GIC's that I call our Health account into which we pay the equivalent of monthly private health insurance premiums.
| CGO |
9:22 am
February 7, 2019
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Freedom said
I see lots of statements like this. It seems to ignore the fact that there can also be capital losses.
Yes, there will be some capital losses but the data shows that over the long term, there are more capital gains than losses.
| CGO |
11:25 am
September 11, 2013
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Though you won't participate in gains, and might participate in losses in the event of a major crash, if you contribute to or receive income from public and/or private sector pension plans you are already in the stock markets as their funds include equities too. Interesting to me how many people vote for anti-corporate governments when everybody's in the stock markets.
12:41 pm
August 27, 2026
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With a private or public pension plan, the question is: who takes the investment risk?
In the past, that was generally the employer or the government. But with many private plans today, the individual takes on more of the investment risk by choosing mutual funds and other investment options. If those investments perform poorly, the individual can ultimately suffer the consequences of those choices.
The individual can usually only choose from a limited selection of pooled investment options.
I have never been part of a private or public pension plan. I was financially independent by the time I was 27.
7:03 am
April 27, 2017
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It's a bit of a gimmick but Wealthsimple runs a lottery with weekly giveaways.
Two of us average $13 monthly in such giveaways based on the last 3 months “winnings”. We tend to keep around $10k in WS chequing account. According to my calculation, lottery handouts add 1.5% in annual interest. Makes circa 3.75% total. Obviously not guaranteed nor very scientific… It's a lottery. In exchange you have to keep opening and clicking their app at least weekly. It's kinda fun so I am not complaining.
1:55 pm
April 6, 2013
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Bill said
Though you won't participate in gains, and might participate in losses in the event of a major crash, if you contribute to or receive income from public and/or private sector pension plans you are already in the stock markets as their funds include equities too. …
Penson plan members participate in both the gains and the losses.
Canada Pension Plan contribution rates are based on the investment returns. Should there be a shortfall, Canada Pension Fund Act section 113.1(11.05) will trigger involuntary increases in contribution rates and/or suspension of the indexing of benefits should federal and provincial governments fail to voluntary agree to changes.
CPP does not have a sponsor that is compelled to make up any shortfall like employer-sponsored defined benefit pension plans have.
2:03 pm
November 18, 2017
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I for one am pretty satisfied with my net worth, which is almost exactly what the most recent reports on Canadians' average net worth is. I am in my seventies.
Most of my comfort comes from not spending stupidly, not paying credit interest, not having wives or kids. I don't smoke and drink very rarely.
It's not true that equities always beat fixed earnings over ten-year windows; in the last fifty years, half the sliding ten-year windows - and several longer periods - have seen equities fall behind. It's true that overall, equities do make more than fixed deposits, but that's not true for most investors.
95% of retail investors in Canada lose money on their equities and cash out with less than they invested. While the market makes more, that is concentrated in a small segment of the investment population.
I'm risk-averse and my choices have served me well.
RetirEd
2:50 pm
October 27, 2013
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RetirEd said
It's not true that equities always beat fixed earnings over ten-year windows; in the last fifty years, half the sliding ten-year windows - and several longer periods - have seen equities fall behind. It's true that overall, equities do make more than fixed deposits, but that's not true for most investors.95% of retail investors in Canada lose money on their equities and cash out with less than they invested. While the market makes more, that is concentrated in a small segment of the investment population.
Please provide citations (study/research links) for that assertion. While it IS well known and understood 'active' investing under performs passive indexing per the annual SPIVA reports and many retail investors actual portfolios under perform both active and passive investing due to bad market timing, it is perverse to suggest 95% of equity investors end up with portfolios smaller than invested capital they have placed in equity markets.
3:27 pm
April 27, 2017
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RetirEd said
It's not true that equities always beat fixed earnings over ten-year windows; in the last fifty years, half the sliding ten-year windows - and several longer periods - have seen equities fall behind. It's true that overall, equities do make more than fixed deposits, but that's not true for most investors.
95% of retail investors in Canada lose money on their equities...
These claims are demonstrably false unless you are picking a particularly weird small corner of the market. Morningstar’s historical data show stocks beating bonds in roughly 83% of rolling 10-year periods, not 50%. And over 1928–2022 there was not a single 25-year period in which cash beat stocks. https://www.morningstar.com/co.....-investing
Also, there is zero credible evidence that 95% of Canadian retail equity investors lose money. You may have misunderstood unrelated statistics, eg that most active investors underperform passive.
3:28 pm
August 27, 2026
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I do not know if it is half the time, but bonds do beat equities some of the time. After the Great Depression, I don't believe the Dow Jones Industrial Average was even back to even until 1972, on a price-only, inflation-adjusted basis.
I have also confirmed that a common pattern with equity investors is:
"Many small investors make some money, then lose some, then leave" — that is a credible, evidence-based pattern.
A couple of small notes, not changes to your wording, just flagging for accuracy: your first paragraph (asking for citations, noting SPIVA, etc.) reads clean already and I didn't touch it. And worth double-checking before you post — the Dow's nominal (unadjusted) recovery was 1954, not 1972; 1972 only applies specifically to the inflation-adjusted, dividends-excluded version, so you may want to keep that qualifier attached when you state it, since without it the claim reads as wrong.
4:41 pm
April 27, 2017
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Freedom said
I do not know if it is half the time, but bonds do beat equities some of the time. After the Great Depression, I don't believe the Dow Jones Industrial Average was even back to even until 1972, on a price-only, inflation-adjusted basis.
Why make up obviously false claims? What's the purpose?
Accounting for inflation Dow beat pre-depression 1929 peak in 1959. One would have had to be seriously unlucky to invest everything on the day of pre-depression peak. But that's not the real story. Dow does not reflect dividends. With dividends reinvested, the terribly unlucky hypothetical investor who put everything into the market at the pre-depression peak would have got his money back decades before 1959. And Dow is a bad measure of the market; today you can get far more diversification in a nanosecond.
5:10 pm
April 6, 2013
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Why make up obviously false claims? To justify poor investment decisions.
As well, no-one invests like the Dow Jones Industrial Average. It is a junk average that changes the weights of each stock after one of the stocks splits and discards dividends. No-one manages a portfolio like that.
I looked into this before. S&P 500 recovered from the 1929 crash by end of 1936:
Bill said
Not sure where the 10 years comes from, maybe there's research underpinning that. The US stock market peaked in 1929 and didn't get back to that level until about 1954 so for 25 years 100% fixed income would have been better. …Yes, I presented the research years ago.
It is also not true that it took 25 years to recover from 1929. The investor would have recovered around end of 1936.
According to NYU: Historical Returns…, $100 invested in S&P 500 at the start of 1928 grew to $143.81 at the start of 1929. That $143.81 recovered and became $145.38 by the end of 1936.
By end of 1954, that $145.38 at the start of 1929 became $783.18, far from just breaking even.
5:06 am
August 27, 2026
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mordko said
Why make up obviously false claims? What's the purpose?
Accounting for inflation Dow beat pre-depression 1929 peak in 1959. One would have had to be seriously unlucky to invest everything on the day of pre-depression peak. But that's not the real story. Dow does not reflect dividends. With dividends reinvested, the terribly unlucky hypothetical investor who put everything into the market at the pre-depression peak would have got his money back decades before 1959. And Dow is a bad measure of the market; today you can get far more diversification in a nanosecond.
This statement is true. The 1972 number is adjusted for inflation, so it is correct.
Why make up obviously false claims? What's the purpose?
Well, people make obviously false claims about the market to begin with, making it seem like there is no risk involved.
Brokers and others do this because it is more profitable for them to have you put all your money into the stock market.
When I saw this obvious jargon, I simply countered it with other facts as well, to highlight that the market is not risk-free.
5:29 am
February 7, 2019
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Freedom said
This statement is true. The 1972 number is adjusted for inflation, so it is correct.
Why make up obviously false claims? What's the purpose?Well, people make obviously false claims about the market to begin with, making it seem like there is no risk involved.
Brokers and others do this because it is more profitable for them to have you put all your money into the stock market.
When I saw this obvious jargon, I simply countered it with other facts as well, to highlight that the market is not risk-free.
You have the Freedom to keep all your investments in Cash and GIC's. After taxes, that may occasionally come close to keeping up with inflation.
I choose a relatively balanced approach that combines Equity Funds, Fixed Income Funds, Cash and GIC's that after taxes have yielded well in excess of inflation over the last 30 years.
As for Cash and GIC's, I choose reliable Banks and Credit Unions that offer a balance of Service and Rates.
| CGO |
8:00 am
April 27, 2017
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Freedom said
This statement is true. The 1972 number is adjusted for inflation, so it is correct.
Why make up obviously false claims? What's the purpose?Well, people make obviously false claims about the market to begin with, making it seem like there is no risk involved.
Brokers and others do this because it is more profitable for them to have you put all your money into the stock market.
When I saw this obvious jargon, I simply countered it with other facts as well, to highlight that the market is not risk-free.
1. Your claim about 1972 is completely false, accounting for inflation. So says Federal Reserve. The 1929 peak was 381.17. Using CPI of 17.1 in 1929 and 29.1 in 1959, the equivalent 1959 level was about 649. The Dow reached 679 by the end of 1959. So the inflation-adjusted 1929 peak had already been surpassed by 1959, roughly 13 years before 1972. And that still ignores dividends, which would move investor break-even much earlier. They don’t magically evaporate so there is no reason to ignore dividends.
Sources:
https://www.federalreservehist.....sh-of-1929 https://nces.ed.gov/programs/d.....106.70.asp
https://www.statmuse.com/money.....erage-1959
Not only are you repeatedly lying about easily verifiable data. Lies are not “facts”, no. You also picked a silly benchmark as already noted above. As noted in post 42, the market recovered by 1936.
2. Nobody made the “no risk” claim, so you are providing false information to rebut something in your head. Everything has risk, including cash. The risks are different for different assets but always present. Stocks tend to be more risky in the short term. Fixed income is more risky over longer periods of time.
9:42 am
November 18, 2017
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I'm not a typical person either. First, I'm in my seventies. Older folks need to reduce risk, because there's neither time to recoup losses nor regular income to replace gaps. I also have very good tax treatment due to my TFSA holdings.
I'm not going to have an easy time sorting this all out - some of the responses seem to have gotten confused in what they attribute to whom.
AltaRed et al: The 95% of equity investors ending up with losses.
This has been regularly reported over many years, and the reasons do include a lot of investors bailing when things go south. Check also:
blog.sterlingfoundations.com/2023/11/20/do-95-of-stocks-eventually-lose/
isfm.co.in/why-do-95-investors-leave-the-stock-market/
These turn up fairly frequently. Be careful not to use stats including day trading, which has even worse numbers.
It's also true that the biggest, most experienced investors do better.
ALL: the specific times of negative windows are beyond my research capabilibties. There are many analyses, and assumptions, but I've seen this citation for decades, and here are some current examples: (I have no way to cite televised finance shows I've seen)
dqydj.com/dow-jones-drawdown-history/
http://www.fool.com/investing/.....ince-1928/
tradethatswing.com/a-history-of-stock-market-percentage-declines-15-to-50-in-charts/
themeasureofaplan.com/us-stock-market-returns-1870s-to-present/
The fact that increases, over time, outpace drops is true. But those periods of drop do exist. Over time, yes, the markets do tend to go up... but a lot of that is inflation. Some citations to try to adjust for that. I can't find any consistency in their attempts. Also, Canadian and US markets do not track perfectly.
Nobody knows what any future period will prove to yield. And almost nobody is in a perfect buy-and-hold situation. Especially leveraged investors That's why the fact that markets recover eventually is no comfort to those in a losing position. Remember the 2008-ish frenzy by brokers to get clients to 'stay the course'? The broker commissions were reliable. The investors who tried to ride it out were not so lucky. Remember the Reichmanns? (Spelling?)
Like real estate, the biggest advantage is gained on the day you buy. At the moment, there's a lot of underwater real estate, too.
And yes, the Dow Jones is an imperfect way to track the market. We have no way to track the aggregate of other investors or even sectors, though, with as consistent a track record as the DJ.
MY MAIN POINT: equities are not the way for everyone.
RetirEd
